

Core Insights - As of the end of July, China's ETF market has surpassed Japan, becoming the largest ETF market in Asia with an asset management scale of $640.6 billion compared to Japan's $622.3 billion [1][2][5] Group 1: Market Growth and Dynamics - China's overall ETF scale reached 4.97 trillion yuan ($747.5 billion) by August 22, showing a remarkable increase of over 1.2 trillion yuan ($184.5 billion) year-to-date [5] - The growth in China's ETF market is driven by strong net inflows, particularly in industry and bond ETFs, with net inflows of 534.1 billion yuan ($82.5 billion) and 451.9 billion yuan ($70.1 billion) respectively [5] - Equity ETFs have seen a significant increase, with a growth of nearly 800 billion yuan ($123.5 billion) this year, surpassing the 4 trillion yuan ($615.5 billion) mark for the first time [5][6] Group 2: Structural Comparison with Japan - Japan's ETF market growth has slowed, with its first ETF launched in 1995 taking 20 years to reach $100 billion and 30 years to reach $600 billion, while China achieved similar milestones in 15 and 21 years respectively [8] - The structure of Japan's ETF market is heavily weighted towards large-cap stocks, with 96.86% of its ETFs being stock-based, while China's ETF market is more diversified, with significant growth in bond and cross-border ETFs [9][10] Group 3: Future Outlook - The internal drivers for China's ETF growth include state-owned investment and strong regulatory support, which are expected to maintain China's lead over Japan in asset management scale [7][11] - The rapid approval of new ETF products and the potential for more diverse offerings, including actively managed and derivative-based ETFs, are anticipated to further enhance the market's growth potential [11]